20.6 sq mi, some 65,773 people, on a string of islands in the middle of the atlantic. – Bermuda

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Bailout analogy

Your cousin is charged of a crime and is put in jail. You know he’s the type that will run if guilty once bailed out so you refuse to put up the bond to free him. Your soft hearted brother however decides to take the risk and puts up the money. Surprise of all surprises your cousin bolts. The collection agency comes to collect the bond fee from your brother only to realize it will bankrupt him and put his longstanding community business out of work. Thus, government steps in and decides that you’re going to pay part of the bond so your brother doesn’t lose his business. Even worse, your brother publically thanks government for their help and acts like you had nothing to do with it. Sounds fair right?

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14 thoughts on “Bailout analogy”

Reminds me how the government steps in and decides that you will bailout someone else for having children they can not afford, Making you pay part of their education, transportation, housing, daycare, etc …

J Galt,
Sure, though in that case you’re paying to hopefully turn them into productive contributors of society which is better than the alternative.
Mind you I have long questioned whether it would be warranted to try to discourage such behavior through things like mandatory vasectomies for guys who have multiple children they cannot afford. Similarly Tubal ligation for women who do the same. Alternatively you could reward people for not having children.

“Sure, though in that case you’re paying to hopefully turn them into productive contributors of society which is better than the alternative.”
Right you are paying for the poor life choices that others have made, and they are being rewarded for their bad behavour. We foot the bill and they still mess up the kids who repeat the exact same mistakes.
Sounds like the productive members of society are being held to ransom and will be overwhelmed by the ever increasing population and demands of the unwilling and unable.

J Galt,
If given the right tools kids should have better opportunity to climb out of poverty.
It is easy to say stop paying for these things but you then have to deal with the consequences such as higher crime.
What recommendations do you have to encourage the behavior you would like to see?

Going back to the first comment, is the belief that education and transportation should not be provided by government? Because as of now I can’t see the relation with bad decisions made by persons/corporations…

The government may be quick to claim the credit for helping parents but ultimately this action is little more than shifting the expense from one group of people to all people. Isn’t this action grossly unfair for those people who had no say in the parents taking on this expense but have been looped in when it comes to paying the consequences?

J Galt,
The question would be whether we’re getting what we pay for.
Take prison as an example. Here you have the overall population paying ridiculous sums to ensure that criminals are separated from society and hopefully rehabilitated. Another example of shifting expense from one group to all.
Would you advocate eliminating prisons and letting these people stay amongst society regardless of what crimes they commit?
Then we get to the education issue. Would you rather all youth who cannot afford it go uneducated? Uneducated people contribute far less to society than highly educated people. The higher the education, the more contributions, the greater the earnings and thus the greater the taxes, the lower that needs to be taxed and thus the greater external purchasing power. Having a highly educated populace is beneficial to all and thus does it not make sense for all to subsudize the costs? Mind you, this assuming you have an education system that actually works and provides returns on your investment.
There is no clear cut definition of what is fair to be shared amongst the people and what isn’t. Why should you be forced to pay for roads you may well not even use? Why should your health insurance be higher when you live healthy while there are people who are grossly overweight and partake in unhealthy habits? There are no easy answers and each one is up for debate.
No system is ideal and thus collectively we must weigh the benefits vs. the costs and decide action for each individual case.
In the case of the BIU’s bond, they made a poor decision and put their word behind the performance of Pro-active. They made an agreement to pay and now haven’t stuck to it. The debt shouldn’t be expunged for what amounts to no returns. In the very least there should have been an agreement on how it would be paid back.

I think the question would be
What is Government’s legitimate role?
If government where not in the business of Education, then they would not have been building a school, choosen Proactive for the project which came in way over budget, paid UAH for a bond they (UAH) couldn’t afford to honour, and finally written off the between 6.5 and 15 million (depending who you believe when it comes to interest etc..)
Going back to your question are we getting what we paid for, the answer of course is no.

UAH could actually afford to cover the bond from what I’ve read. They put their buildings up as collateral. If that collateral is sufficient then they could have been required to sell those buildings to government and start renting or take out a mortgage on the properties to pay off the debt. Government could have found a happy medium in providing @ cost interest on such a mortgage such that the union wouldn’t have been hurt as badly by paying off such a debt.
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I’m not a firm believer that government should be in the business of doing much of anything as far too often government is not very efficient and effective when it comes to business.
Governments role is more suited towards regulating businesses to ensure they act in the best interests of the people.
As I’ve stated before, I would much rather seeing education fully privatized and government taking on a regulatory role to ensure they meet applicable standards.
Mind you, when you have a government who neglects putting things out to tender and isn’t transparent, we’re no better off then when they do it themselves.

“UAH could actually afford to cover the bond…”
Excellent idea, shame people are elected on popularity instead of ability, why didn’t the government think of that?
“..I’m not a firm believer that government should be in the business of doing much of anything as far too often government is not very efficient and effective when it comes to business.”
We seem to agree on a lot except I believe you would want government to fund each child’s education, where I think it should be the parents responibility.

As a moderately green centrist I am not at all surprised that we agree on some things while are likely to disagree on others.
As suggested, I don’t believe it is government’s responsibility to be in the ‘business’ of things however I do believe governments responsibility is to regulate business to ensure fairness and equality while also providing support for initiatives which provide positive returns for the people.

Thanks for the discussion as relates education and government’s involvement.
How about public transporation? If public transportation was fully privatised, would there even be a fully-functional St. David’s route, for example? Can you even run a proper bus service at a profit? I’m thinking no – admittedly I do not know the rates charged and service hours of the various ‘minibus’ services in certain parts of the island – but I can’t see a business willingly going into the bus industry.